Investors are Missing the Boat on Ford (F), Time to Buy for a 2H Margin Reacceleration

July 26, 2012 1:10 PM EDT
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Price: $12.36 -0.56%

Rating Summary:
    8 Buy, 14 Hold, 4 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 30 | Down: 30 | New: 23
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Shares of Ford (NYSE: F) havn't done much of anything since reporting better-than-expected second quarter results yesterday, but according to analysts at Goldman Sachs investors are missing the boat.

Goldman is expecting a 2nd-half margin reacceleration, which they said is far from priced in. The firm sees margins widening 140bp in the 2nd-half due to, capacity additions in North America which should alleviate constraints; a move beyond heavy launchs costs in the 1st-half; share and pricing benefits from a slew of new
products; and easier commodity and hedging comps. "We expect this to drive upward consensus estimate revisions and provide support to the shares, which currently trade at 5.5x cash earnings," the analyst said.

While the firm is positive, they warn that the key execution risk is Europe. They believe some of the volume players are selling at close to marginal cost there. They don't see Europe returning to profitability until 2014, however this is discounted in the shares they believe.

Goldman raised their price target from $13 to $14 and revised 2012/2013/2014 EPS estimates to $1.30/$1.65/$1.91 from $1.24/$1.61/$1.92. They maintained their Buy rating.

For an analyst ratings summary and ratings history on Ford click here. For more ratings news on Ford click here.

Shares of Ford are down 0.94 percent to $8.89.

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